Connecting Africa 

Chinese firms such as Huawei Technologies and ZTE have made significant contributions to Africa's telecommunications infrastructure. These companies not only have contributed to Africa's economy by supplying cutting-edge technology, but have provided employment and training to thousands.  

Africa's telecommunications infrastructure has expanded at a rapid pace in the last decade. The number of mobile phone subscribers n the continent jumped from 16 million in 2000 to 376 million in 2008. More than just a modern accouterment, mobile phones provide important means for economic growth. The World Bank estimates that a 10 percent increase in telephone subscriptions adds an additional 0.6 percent to GDP, as real-time information is able to more efficiently allocate scarce resources.  Behind this wave of newly connected African mobile phone users, and advancing the continent's economic development, have been Chinese telecommunications firms, most notably Huawei Technologies and Zhongxing Telecommunications Equipment (ZTE) - providers of telecom equipment. Both entered Africa in the late 1990s, before the advent of China's "go abroad" policy and its subsequent rise internationally.

Huawei, in fact, is China's sixth highest earner of foreign revenues, first among non-natural resource related companies. Huawei generates over $2 billion in sales to Africa through 32 representative offices on the continent, and in addition to these offices, trains African engineers at facilities in Nigeria, Kenya, Egypt and Tunisia. Around 1,500 Africans are employed by Huawei, including a number of engineers at a research and development center in South Africa.

ZTE was involved in Africa as early as 1996. One of its first major investments in the continent occurred in 2001 when it entered the Congo-China Telecom joint venture. Since its inception, this initiative has maintained a significant market share in the Democratic Republic of Congo. ZTE would later invest $95 million in the rural networks of Nigeria in 2005, before making a $1.9 billion investment in Ethiopia in 2006.

Through ZTE's equipment and expertise, Ethiopia was able to unify its national network. A training facility was established in Addis Ababa, which has educated over 1,000 people. Also adding to ZTE's ability to meet Africa's surging demand is a factory established in Algeria in 2006.Chinese service providers may constitute the next wave in African telecommunications investment. In September of this year China Telecom announced plans to enter Kenya and Egypt. A few months earlier, China Mobile expressed its interest in entering the African market through acquisition, although no target companies have yet been announced.

From the late 1990s to the present, the signal from China is clear: China has a keen interest in African telecommunications.

The ChinAfrica Econometer is produced by THE BEIJING AXIS, a cross-border business bridge to/from China in three principal areas: Strategy, Sourcing & Investment.

For more information, please contact: Barry van Wyk

barryvanwyk@thebeijingaxis.com

www.thebeijingaxis.com